Introduction

• Chester Barnard, a business executive, public administrator and author of management

and organisation theories, is one of the few administrative theorists who propounded
management and organisational theories and principles based on personal experience.
• He is considered the spiritual father of the social system as well because Barnard
emphasized the social nature of organizations, viewing them not merely as mechanical
structures but as intricate systems composed of individuals interacting with one another.
He highlighted the importance of informal relationships, communication patterns, and
shared values in shaping organizational behaviour.
• His outstanding classic, ‘The Functions of the Executive’, was based on a series of
lectures he gave on administration at the Lowell Institute in Boston and is a compulsory
reading in all public administration, management and organisation studies across the
globe.

Life and Works

• Chester Irving Barnard (1886-1961), born at Malden, Massachusetts, USA in a family

of modest means, had to work very hard for his livelihood. He joined as an apprentice to
a piano tuner, and while working, he prepared for the pre-school and joined the
prestigious Mount Herman School. In 1906, he joined Harvard and majored in
economics and government.
• To support his studies financially he undertook diverse tasks like typing, conducting
dance orchestra, etc. In 1909, he joined as a statistician with the Bell Telephone
Company and was promoted as a Commercial manager in 1915. In 1922, he became
Assistant Vice-president and General Manager of the Bell Telephone Company at
Pennsylvania and was promoted as Vice-president of the company after four years. In
1928, he became President of the Bell Telephone Company of New Jersey at the age of
forty-one and continued until 1948. After retirement from the Bell Company, he worked
as President of the Rockefeller Foundation (1948-52) and Chairman, National Science
Foundation (1952-54).
• He worked with the New Jersey Emergency Relief Fund and New Jersey Reformatory.
During the Second World War he was the president of the United Services Organisation
(1942-45), Director of the National War Fund and member of the Naval Manpower
Survey Committee.
• Thus he occupied many positions both in government and private administrations. His
experiences in various capacities and in different organisations afforded him an
opportunity to understand administrative processes in the government.

Organisation as a system of human cooperation.

• Barnard viewed the organisations as a system of human cooperation. The most

important limiting factors in the situation of each individual are his own biological
limitations, others being physical and social. The most effective method of overcoming
these limitations, according to Barnard, is cooperative social action. This requires that
he adopts a group or non-personal purpose and takes into consideration the process of
interaction. With the basic premise that individuals must cooperate, Barnard builds his
theory of organisation.
 • As a system, it is held together by some common purpose by the willingness of certain
people to contribute to the operation of the organisation, and by the ability of such
people to communicate with each other.
• Barnard strongly disapproves the concept of economic man and propounds the theory
of contribution-satisfaction equilibrium. Contributions, which may be regarded in
terms of organisation as activities, are possible only when it is advantageous to
individuals in terms of personal satisfaction. Barnard says that if each person gets back
only what he puts in, there is no incentive, that is, no net satisfaction for him in
cooperation. What he gets back must give him advantage in terms of satisfaction;
which almost always means return in a different form from what he contributes. The
satisfaction which an individual receives in exchange for his contribution may be
regarded from the view of organisation as inducement or incentive.

• Barnard specified different types of specific and general inducements or incentives

which are as follows.

1. Material inducements such as money, things or physical conditions;

2. Personal non-material opportunities for distinction, prestige and personal
power.
3. Desirable physical conditions of work;
4. Ideal benefactions, such as the pride of workmanship, sense of adequacy,
altruistic service for family or others, loyalty to organisation in patriotism.

Formal and Informal Organisations.

• According to Barnard, formal organisations can be defined as a system when two or

more than two persons consciously coordinate with each other.
• For any organisation to sustain and function in an efficient manner, there are a few
requirements which should be followed such as, ( a ).the persons should be able to
communicate with each other, ( b ). there should be persons who are willing to
contribute action and ( c ). there should be a common purpose.
• Now, we would try to understand the importance of each of the three factors
individually. Willingness, it can be defined as an activity be it economical or non-
economical, which we want to pursue without any external influence.
• Again, in case if a person is compelled to perform an activity under pressure, it divides
the willingness into two categories that is positive and negative willingness. If we go
deeper, let us suppose a person is asked to do a job and the requirements of that
activity satisfies the actor, he will do the job willingly it can be considered as positive
willingness.
• In case, if the person is not satisfied with the requirements, he or she would refrain
from doing that activity and it would be called as negative willingness.
• From the viewpoint of the individual, willingness may be the joint effect of personal
desires and reluctance and from the point of organisation, it is the joint effect of the
objective inducements offered and the burdens imposed.
• Coming to second important aspect, we would talk about cooperation. For cooperation
there must always be an objective or purpose because until and unless the purpose of
doing a task is accepted by all, cooperative action cannot be stimulated.
 • Barnard also talks about the difference between organisational purpose and individual
motive, on one side an Individual motive is internal, personal and subjective on the
other hand a common purpose is impersonal external and objective.
• Now coming to the third, let us talk about the importance of communication, any task
or any work can be accomplished by the persons contributing to it and the force that
binds them together is communication.
• He focused on four characteristics of formal organisations that is systems,
depersonalisation, specialisation and informal organisations.

Informal Organisations

• Individuals in the organisation continuously interact based on their personal

relationships rather than the organisational purpose. Such interaction may be due to
the gregarious instinct or fulfilment of some personal desire.
• Both the formal and Informal organisations works in coordination with each other, An
informal organisation, to be effective, must always establish formal organisations
within it. In turn, formal organisation creates informal organisations as a means of
communication and to protect the individuals from the domination of the formal
organisation.
• Most organisations deny or neglect the existence of informal organisations in their
organisations due to the fact of their problems related to the formal organisations and
if they accept the existence of informal ones, it means they are accepting their flaws.

Types of Authority

• Barnard looks at authority from a completely different perspective; for him, until and
unless someone accepts the authority, it cannot be implied.
• He defines authority as “the character of a communication (order) in a formal
organisation by virtue of which it is accepted by a contributor to, or ‘member’ of, the
organisation as governing the action he contributes; that is as determining what he
does or is not to do so far as the organisation is concerned”.
• He also mentions the four conditions which when fulfilled the individuals in any
organisation accepts authority, they are as follows.

• When the communication is understood : As we got to know earlier, that

Barnard associates authority with communication. That is why, he focuses on
the fact that only if the communications are able to be interpreted properly,
then only they can be understood, and provides authority.
• Consistency with the Organisational Purpose : Any communication, which
does not aligns with the purpose of organisation, is unlikely to be accepted,
and any intelligent person will deny authority if he understands that it is a
contradiction with the purpose of organisation.
• Consistency with the Organisational Purpose: If the communications are
detrimental to the personal interests of the individuals, they have little chance
of being accepted. Similarly, the orders should also provide positive
inducements to the individual to motivate them. Or else the orders would be
disobeyed evaded as inconsistent with personal interest.
 • Consistency with the Organisational Purpose : In cases where a person is
unable to comply with an order, it will generally be disobeyed or disregarded.
Therefore, orders should not be beyond the mental and physical capacity of
the individuals.

Zone of Indifference .

• The acceptance of authority in organisations, as noted, depends on the zone

of indifference. If the orders are arranged in order of their acceptability to
the person affected, they fall into three different categories, viz., (1) those
which will clearly be unacceptable and not obeyed, (2) those which are on
neutral line i.e., either just acceptable or just unacceptable, and (3) those
which are unquestionably acceptable. Orders, which fall under the last
category, come within the ‘zone of indifference’
• If the orders fall into this zone, there is a high chance for them to be
accepted but the Zone of Indifference varies depending upon the
inducements offered and the sacrifices made.

The Fiction of Authority

• The fiction of authority talks about the efficiency of an organisation, which

is depended upon the extent up to which the authority is being accepted.
• There are some possible reasons of the authority being accepted, for
example, any contributor in an organisation have some personal interests
which falls in the zone of indifference which makes them acceptable.
• The fiction of authority establishes the presumption that individual accepts
orders from superiors because they want to avoid making issue of such
orders and avoid incurring personal subservience or loss of personal status
with their colleagues.

Responsibility

• He examines responsibility from the point of view of morality and

defines it as the power of a particular private code of morals to control
the conduct of the individuals in the presence of strong contrary desires
or impulses, along with that he focused on the association of authority
and responsibility.
• Barnard believed that there is a mutual obligation between those who
hold authority and those who are subject to it. In other words, while those
in positions of authority have the responsibility to give orders and make
decisions, individuals within the organization have a corresponding
responsibility to carry out those orders and contribute to the achievement
of organizational goals.
• Barnard's acceptance theory of authority also applies to responsibility.
Just as authority depends on the acceptance of individuals within the
organization, so too does responsibility. Individuals accept responsibility
for tasks and objectives because they recognize that doing so is necessary
 for the functioning of the organization and the achievement of common
goals.

Decision Making

• Organisations take decisions to achieve the purpose for which they

come into being. He talks about the two kind of decisions that is
personal and organisational.
• Personal decisions relates to the participation of a contributor in the
organisational process which are often based on inducements,
organisational offers and they can be illogical as well.
• Organisational decisions on the other hand are related with the benefit
of organisation, information based, mostly logical and can be hold
accountable.